Estimation of Flood Loss On June 30, 2010, a flash flood damaged the warehouse and factory of Padway Corporation, completely destroying the work-in-process inventory. There was no damage to either the raw materials or finished goods inventories. A physical inventory taken after the flood revealed the following valuations: A review of the books and records disclosed that the gross profit margin historically approximated 25% of sales. The sales for the first six months of 2010 were $340,000. Raw material purchases were $115,000. Direct labor costs for this period were $80,000, and manufacturing overhead was historically applied at 50% of direct labor. Required Compute the value of the work-in-process inventory lost at June 30, 2010. Show supporting computations in good form.
Estimation of Flood Loss On June 30, 2010, a flash flood damaged the warehouse and factory of Padway Corporation, completely destroying the work-in-process inventory. There was no damage to either the raw materials or finished goods inventories. A physical inventory taken after the flood revealed the following valuations:
A review of the books and records disclosed that the gross profit margin historically approximated 25% of sales. The sales for the first six months of 2010 were $340,000. Raw material purchases were $115,000. Direct labor costs for this period were $80,000, and manufacturing overhead was historically applied at 50% of direct labor.
Required
Compute the value of the work-in-process inventory lost at June 30, 2010. Show supporting computations in good form.
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